Earnings Cheat Sheet: Textainer (TGH) Continues To Perform Amidst A Tough Dry-Freight Market

Earnings: Q2 profits of $0.51 vs. $0.50 consensus and $0.65 in Q2 last year.

Revenue: Up 37% YoY to $74.5 million vs. $69 million consensus.

Textainer (NYSE:TGH) saw “solid results” in the period “as we continue to execute our business plan and capitalize on the positive fundamentals of the container-leasing industry,” said President and Chief Executive John Maccarone.

Comment: TGH focuses on leasing dry-freight containers that fit on various modes of transportation like railroads, trucks and ships.  It also leases specialized and refrigerated containers and sells used containers.  During the recession, TGH increased its presence in the refrigerated segment, expanded its container count and entered purchase-leaseback agreements with shippers.

TGH reported a solid Q despite a $4.7 million loss on an interest rate swap.  Lease rental income, TGH’s most important revenue stream, shot up 28% YoY vs. a 9% YoY drop in Q2 last year.  Gains on container sales more than doubled.  TGH’s avg. fleet utilization rate improved to 95.3% from 86.9% a year earlier and 90.1% last Q.

Like many other companies involved with marine shipping, TGH’s performance is tied to the global growth story.  Nonetheless, long-term contracts help to shield the company from sluggish spot-market rates.

TGH also announced that it will be raising its quarterly dividend by $0.01 to $0.25, the second consecutive Q management has upped the company’s payout.

As you can see on the weekly chart below, TGH has put together a solid track record of consistent gains over the past two years, nearly tripling over that span.  Still, shares are not necessarily expensive.  Having closed out last week at $27.77, shares of TGH are trading at just 10.6x forward earnings while promising 11.5% YoY earnings growth and a 3.4% yield.

While a global double-dip would surely sink shares, TGH may be just the kind of basic, consistent name you need to bring some stability to your portfolio during these uncertain times.

Disclosure: No holdings in TGH.